City hands its own agency over to collections

San Diego’s dismantled redevelopment authority owes the city more than $600,000 and is so late in paying that the city is turning the agency over to collections.

The bill is for building-permit fees for a 550-foot-long pedestrian bridge linking Petco Park and the San Diego Convention Center.

The project was to cost $12.8 million, a price that rose to $26.8 million with design changes and other complications. The redevelopment agency’s project planning did not include the added building permit fees from unexpected construction delays.

Now the state has ordered redevelopment agencies shut down, and state regulations block payment of the fees. Why? Because the added fees were not part of a binding city contract.

The unpaid bill has its roots in another city problem. Invoices for the permitting costs were sent out late because of a citywide computer change-out that delayed thousands of Development Services invoices for months or years.

Had the bills been sent earlier, they might have been paid by the redevelopment agency before the state forced its shutdown.

Getting the bills paid by the “successor agency” that has been set up to wind down redevelopment is more complicated.

Money paid out by the successor agency will not be there when its assets revert to the state — the outcome Gov. Jerry Brown sought when he shut the agencies down.

“The dissolution legislation created many complicated processes and placed constraints on the successor agency’s ability to make timely payments on some obligations,” said Jeff Graham, who was vice president of the Centre City Development Corp., which planned the bridge project. “Payments must be made pursuant to the approval of recognized payment obligation schedules. This new process has caused the delays in some payments, this payment to the city being one of them.”

The Harbor Drive Pedestrian Bridge broke ground in October 2008 and opened in March 2011, about a year and a half late.

“There is an executed memorandum of understanding between the city and former redevelopment agency where the agency is to reimburse the city up to $681,000 for city services to inspect and perform oversight of the bridge’s construction,” Graham said. “The agency paid the entire $681,000 owed, but the city’s charges had increased to approximately $1.3 million due to the longer construction duration.”

The bill for the permit and inspection work didn’t come until May, after the California Supreme Court upheld the state’s decision to dissolve redevelopment agencies in December 2011.

The invoice was one of thousands of bills sent months or years late for work on complex building projects performed by the Development Services Department.

A $50 million citywide computer software upgrade known as OneSD led to the billing delays. The new software failed to prevent human error in how labor charges were calculated and entered into the city’s computers for a variety of city services. Correcting the charges took months and also led to delays in the city’s fiscal year 2010 and 2011 financial audits.

Before the glitch, the Development Services Department had failed for years to notify project owners of a city requirement to pay for all permit work up front. Owed $6 million as of September, the department is working to collect the overdue amounts.